Landlords’ Tax Advice and Compliance

Landlord’s Tax Relief Ireland, Residential Premises Rental Income Relief, RPRIR

Are you an individual landlord of rented residential property in Ireland?

If so, this nine page Revenue guidance material published today may be of interest to you, especially if you are a non-resident landlord.  In general, non-resident individuals are not entitled to any personal tax credits, reliefs and/or deductions. Section 1032 TCA 1997, however, provides that in certain circumstances, a portion of the credits, reliefs or deductions may be available, which is calculated by the ratio the Irish source income bears to the individual’s total income.

Are there any scenarios in which a clawback of the Relief may arise?

Section 4 of this Revenue guidance manual sets out the circumstances in which a clawback will arise:

The relief will be reclaimed in the following situations:

1. If the landlord ceases to be a landlord of a qualifying premises within four years of the first year in which relief is claimed. This may arise because the residential rental property is sold or gifted or because the landlord has removed it from the rental market

2. If the property is not rented to a tenant and is not actively listed for rent.

3. If the property’s use changes from a residential letting to say, a holiday home or a short-term letting.

4. If the property is rented to a connected person or a relative.

Important points to keep in mind:

• In circumstances where the landlord no longer qualifies for the RPRIR, a Revenue officer will amend the assessment for each year of assessment where the relief was claimed.

• The tax clawed back will not exceed the amount of relief actually claimed.

• The relief will not be clawed back in circumstances where the landlord dies during a year of assessment.

For further information, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-03-04.pdf

If you are a landlord of rented residential property in Ireland seeking comprehensive tax advice or looking to regularise your tax affairs, and wish to deal with a Property Taxes Specialist please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Landlord Taxes, Rental Expenses, Property Tax Deductions

The High Court decision in Revenue Commissioners v Thomas Collins has just been published.  It states that contrary to Revenue’s position, the NPPR (Non Principal Private Residence) charge was in fact an “allowable” expense against rental profits under Section 97(2) TCA 1997.

What was the NPPR Charge?

The NPPR (Non Principal Private Residence) charge was an annual charge of €200.  It was implemented by the Local Government (Charges) Act 2009, as amended by the Local Government (Household Charge) Act 2011.

What does it relate to?

It related to all residential property situated in Ireland which was not used as the owner’s sole or principal residence from 2009 to 2013.

Examples of the type of residential properties liable for the NPPR charge were:

• private rented properties including houses, maisonettes, flats, apartments or bedsits.

• vacant properties – This definition excluded new but unsold residences in situations where they had never been used as a dwelling houses but instead were deemed to be part of the trading stock of a business.

• holiday homes or second homes.

Previous Tax Treatment of NPPR

Irish Income Tax is calculated on the net amount of rents received or rental profits.  In other words Income Tax is charged on the gross rents received less any allowable expenses, as specified in the Taxes Consolidation Act 1997.

The main deductible expenses include:

• Interest on money borrowed to purchase, repair or improve the property,

• Any rent payable by the landlord in relation to a sub-lease,

• The cost to the landlord of providing any goods or services to the tenant,

• The cost to the landlord of insurance, repairs & maintenance, property management fees, etc.,

• Local Authority Rates where relevant.

For details of allowable rental expenses, please visit www.revenue.ie/en/tax/it/leaflets/it70.html

What was the Irish Revenue Authorities and the Department of Finance’s stance prior to this ruling?

That the payment of the NPPR charge for residential properties was NOT an allowable deduction in calculating Income Tax on the rental profits.

Effect of this Ruling

If this High Court decision is not overturned, then it could result in a repayment of taxes overpaid.

There is a time limit for claiming refunds of tax overpaid.

All claims for tax refunds must be made within four years of the end of the year to which the claim relates.

If you are a landlord of rented residential property in Ireland seeking tax advice or looking to regularise your tax affairs, and wish to deal with a Property Taxes Specialist please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.